Tune into the Cloud – The Blogcast – The Business (in 2021)

Tune into: Cloud Distribution

Transcript: 2021 is just underway and Tiesto is once again topping the charts here. This time with a track called “the Business”. So a good time to look at what the business in cloud in 2021 will be about.  For example, how will leading cloud providers be able to maintain their unprecedented growth rates during 2021?
*As always our disclaimer: “These thoughts and views are my own and do not represent those of my employer”

W hen looking at this years product and technology announcements at the annual customer events of the leading cloud providers, it is a bit of deja vu, it feels like more of the same. More and faster instance types, more deployment locations, be it new regions and new (local of global) zones, more refinement of existing products in areas like serverless, AI and machine learning and of course another bunch of Kubernetes distro’s. But technical refinement typically does not lead to exponential growth.

EUROPE’s regional distribution center in Duisburg, GermanyMy feeling is that the more disruptive cloud news this year could be found in the partner track of one of the cloud leaders. Although that news was presented as a list of new features and refinements to that providers cloud marketplace offering, the underlying story seemed to be much more about the cloud provider taking a page from the playbook of its parent retail company. Namely, that exponential growth can be more easily achieved by accommodating third party sellers. A principle that was also, be it briefly, mentioned in the close to three hour CEO keynote of that provider under the heading: “Acknowledge that you can’t fight gravity”.

Extrapolating the above approach, indicates that the growth strategy of this provider wont be simply working itself further up the cloud stack from IaaS via PaaS to SaaS. This providers journey started with first creating and largely capturing the IaaS (Infrastructure as a Service) market, to then – in step two – add an increasing number of PaaS capabilities. Thus annexing or consolidating the smaller but already existing PaaS market into a market now referred to as CIPS  ( Cloud Infrastructure and Platform Services).  If simply moving up the cloud stack , the third expected logical step would then be to proceed towards adding self build or acquired SaaS solutions.  After-all,  SaaS still is and always has been the largest segment of cloud market from a revenue perspective, which makes it a hard to resists and tempting opportunity. But also a  extremely fragmented opportunity with many thousands of niche and vertical solutions and only a few big tasty chunks in the form of HR, CRM, ERP and Collaboration offerings.

When instead of simply moving up the stack, the provider embraces the platform model popularised by its parent, there is no need to outright own these SaaS solutions. Getting a share of the sales, the distribution, the production (in the form of infrastructure hosting and application development), and the implementation (by makin g it  possible to also offer, resell and negotiate professional services through the same marketplace), the providers role in the SaaS economy can become a lot bigger, then when trying to do and own it all alone.

For many of today’s SaaS vendors it may feel a bit uncomfortable to have one (or more) of the current hyperscale IaaS/PaaS  gorilla’s, take such a central and essential role in their business and distribution model. Even more uncomfortable than their traditional worries about a hyperscaler launching a competing SaaS offering into their niche. The larger SaaS providers may decide (or in one case may have just decided and announced) to pursue a “Multicloud SaaS” strategy, making their offering – eventually – available on multiple hyperscale clouds. But for the smaller SaaS vendors this likely will be too costly to consider.

In a later cast I will have a look at how such as SaaS platform play also comes in extremely handy (or may be even required) once the market moves to a composable future. Where customers will expect to mix and match functional components from a multitude of what we now still consider independent software or  Saas vendors.

In short enough exiting twists and turns to contemplate and research during 2021, even if the underlying technology developments may seem to become more and more of the same.

The Business is a 2020 song by the well known Dutch DJ, Tiesto. DJs, unlike cloud providers, started their industry by distributing other people’s products. Simply by playing records from third party artists. But the professional DJ scene quickly  pivoted towards  becoming full fledged music producers, that create and  control most of their content themselves. With one notable exception, namely the vocals. Singing voices are still largely sourced from third parties, such as in the case of “The Business” from James Bell, an artist better known as YAMI. But the brand, the recognition (and the revenue) has shifted away from the individual performing vocalist towards the DJ or orchestrator. 

To play the song, please click the below link  in the show notes.

Disclaimer: These thoughts and views are my own and do not represent those of my employer (per linked policy)

Tune into the Cloud – The Blogcast – Rollercoaster

Tune into: Disruptive Change 

One day, when – with the benefit of hindsight –  we look back at  2020, we will likely remember it as a period of  unprecedented, tumultuous and continuous change. The type of change that makes you a bit nauseous and scared at the same time.  Like a rollercoaster ride, but a lot less predictable and with widely different outcomes and impacts per person, per industry and per country, even though we were essentially on the same ride.

In our industry forecast we referred to this as “the end of averages” (or at least the end of meaningful averages). Within the same country, one industry was experiencing record growth, while another would be fully locked down with no revenue left.  The IT industry as a whole did relatively well,  while cloud came out with flying colors. As we mentioned in our cloud predicts, try to imagine lockdowns and mandatory work from home without the benefit of collaboration platforms like Zoom ,Teams, Webex or without sharing platforms like Dropbox, Sharepoint.

Telecom providers tweaked th e dials of their networks and reaped the benefits of their fairly recent software defined and virtual networking investments. Keeping everyone connected in realtime, despite massively different traffic patterns and volumes. And as always they got little recognition or reward. Communication pipes are very much like the pipes of sewer systems, nobody gives them much    thought, until they overflow of cog up. All the attention, and most of the money, went to what ran Over The Top. Some things never seem to change, not even in 2020.

Looking further ahead, let’s say towards 2025, we do expect some significant change in how the competitive landscape will look. The cloud disrupters of just a few years ago have now become – at record speed – the incumbents of the cloud market. But that market is about to change significantly with the entry of Edge computing. And all market players feel they have a historic right to play there. Cloud provider see Edge computing as a way to distribute their cloud offerings to be nearer to their customers (distributed cloud). Traditional on-premises infrastructure players feel that near premisses (Edge) is a lot closer to their on-premises offering. And telecom players are all eager to finally combine their old (metropolitan real-estate locations, once occupied by massive rotary switches) and new (5G spectrum and close nit antenna coverage) investments into a monetizable offering.

The next 5 years promise to be an interesting chess game, where who blinks first will loose and where  unexpected turns and twists will cause plenty of nausea and fear. Although hopefully only off the professional and commercial kind.

Stay Safe and all the best for 2021.

Rollercoaster is a song by Dutch artist Danny Vera, who during the traditional end of year Top 2000 competition, managed to displace incumbent powerhouses that occupied the lead spot for decades, such as Queen, The Eagles and Led Zeppelin. Already considered as a timeless classic when it was introduced in 2019, the song helped numerous people to cope with the rollercoaster life we got to know during 2020.   

To play the song, please click the link in the show notes.

A Best of … Compilation

Here a short – end of year-  look back at the Gartner research I authored or coauthored during 2020.

In total this included close to a hundred notes, that sounds like a huge number but the majority of those were related to the quarterly forecasts and forecast outlook presentations we publish as a team for the different vertical industries we track. If we exclude those for a minute I lead authored close to ten and coauthored about thirty notes during 2020. 

Below some of the highlights:

Towards the end of the year we have Gartner ITxpo and Symposium (be it a virtual one this time) which launches the publishing of the Gartner CIO Agenda, I coauthored on the summary for Belgium and Netherlands:

2021 CIO Agenda: A Belgium and Netherlands Perspective15 December 2020|The 2021 Gartner CIO Survey indicates Belgium and Netherlands CIOs have demonstrated how technology supported enterprise resilience during the COVID-19 pandemic. Future CIO success depends on the ability to deliver and scale digital capabilities that will drive enterprise growth. Coauthored. 

Closely followed by the annual series of predicts looking ahead, this year I lead the one for cloud:

Predicts 2021: Building on Cloud Computing as the New Normal14 December 2020|2020 events have accelerated cloud adoption to the point where it is the de facto new normal. Enterprise architecture and technology innovation leaders should reject any new project that does not follow “cloud first” as a guiding principle. 

And contributed with own predicts to:

Predicts 2021: CSP’s B2B Will Pivot Forward With Edge and Digital Competencies07 December 2020|Communications service providers are accelerating their digital services growth while facing increasing competition from new and existing vendors. Product leaders at CSPs should engage ecosystem partners for building 5G, edge, SASE or CPaaS services with new API-driven and B2B2C business models. Coauthored. 

Predicts 2021: Navigating Through the Changes for Vertical Industries10 November 2020|Nimble tech providers alter their product and services portfolio as business models change, more so in a postpandemic world. Product leaders selling into different industries will use approaches directed by composable architecture, hyperautomation, AI and CX techniques to address evolving needs. Coauthored. 

In October a Gartner team of analysts coordinated a special Trends Insight Report on the future of tech providers

Tech Providers 2025: Strategic Transformation Drives Growth — A Gartner Trend Insight Report22 October 2020|Every business is becoming a technology business and this phenomenon has profound implications on all facets of the technology provider industry. This special report is a collection of research that highlights the long-term changes in the industry and the strategic actions that are necessary now. Coauthored. 

My main personal contribution to this report was below cloud inspired outlook on the future of the competitive landscape. We discuss 4 trends  shaping the competitive future (further cloudifcation, bundling, composability and regulatory balkanisation).

Tech Providers 2025: Strategic Impacts to the Competitive Landscape16 September 2020|Four global trends will change the competitive landscape significantly over the next five years. Technology and service providers aspiring to thrive or survive into and beyond 2025 must evaluate and adapt their product, market, staffing and other strategies to stand out from the competition. 

Regarding this regulatory balkanisation trend the below is also a good read

Market Trends: Europe Aims to Achieve Digital Sovereignty With GAIA-X04 August 2020|GAIA-X is a European approach, driven primarily by Germany and France, to achieve digital sovereignty through a federated data infrastructure. Technology and service providers must evaluate the impact of GAIA-X on their go-to-market strategy to support European clients. Coauthored. 

Below notes address the core of my coverage: the role of cloud and edge in vertical industries, specifically in the financial services and telecom segments .

Pivot Forward With Gartner’s Vertical Industry Strategy Guide 202010 July 2020|Business value exists in an industry context. Gartner’s vertical strategy guide provides an overview of research that will help leaders at technology and service providers formulate a pragmatic industry strategy, which will help capture growth opportunities across industry markets and technologies. 

Market Insight: Cloud Service Strategy 2.0 for CSPs24 February 2020|Most communications service providers have failed to make a success of their cloud IT services. With the arrival of cloud-based SD-WAN and NFV services, CSP product managers should review their cloud initiatives and restrategize for success. Coauthored. 

Use Gartner’s Cloud Heat Map for Banking and Investment Services to Adapt Your Banking Roadmap21 January 2020|Banks are increasing their investments in public cloud with the overwhelming majority still investing in private cloud deployments. Product managers targeting banks should use Gartner’s heat map to guide their cloud product anddeployment roadmaps to stay competitive and offer innovation. Coauthored. 

Talking about cloud, we published the 7 essential elements of enterprise cloud strategy in a convenient powerpoint, of which our publishing team did a summary translation for the Chinese market

7 Elements for Creating a Pragmatic Enterprise Cloud Strategy07 October 2020|Despite the increasing popularity of cloud services, enterprises continue to struggle with creating and implementing a comprehensive cloud strategy. Enterprise architecture and technology innovation leaders can use the seven best-practice examples in this research to strengthen their cloud strategies.

Summary Translation: 7 Elements for Creating a Pragmatic Enterprise Cloud Strategy

Last mention: the special analysis we did in the first half of the year on the impact of the pandemic on global IT spending by Industry

Forecast Analysis: Global Industry Recession Scenario ARCHIVED 21 April 2020|This document analyzes a recessionary scenario of the IT spending forecast by vertical industry, as a result of COVID-19. In this scenario, industry IT spending is set at $3.12 trillion in 2020, a negative growth of 7.3% in constant currency, with significant variations by industry. 

And now onto 2021, that will hopefully pan out to be a bit less of a “rollercoaster”.

Tune into the Cloud – The Blogcast – Thank you for the Music

Tune into: Podcasting

Tune into the Cloud – The Blogcast – Thank you for the Music

Welcome to the trailer of the Tune into the Cloud Blogcast.
A weekly rendition of one of the Tune in the Cloud blog posts, in a podcast.  

Hi , My name is Gregor Petri,

Let’s start with a disclaimer, please note that “These thoughts and views are my own and do not represent those of my employer.”
For questions regarding this please review the full social media policy webpage listed in the show notes. Now let’s get on with the show.

Transcript:

Podcasting is hot. Red hot. Some expect podcasting to shake up the media industry as fundamentally as cloud computing shook up the IT industry. So a podcast version of Tune into the Cloud, a music inspired cloud blog, seemed a no brainer.  Were it not for the fact that including specific songs in a podcast is not trivial from a legal and copyright perspective. I would go as far as to say it is jstill as complex as trying to build a business importing Karaoke machines and bundling them with popular local music on VHS tapes in the nineties (trust me , I tried).

But as always, complexity and difficulty for one can spell opportunity for another. And in this case Spotify stepped up to the plate by offering the possibility to use songs from their vast catalog in any podcast, as long as it is distributed exclusively on the Spotify Platform. Now, personally I am generally not a big fan of exclusive arrangements, but am rather a big fan of free (as you will have heard by now, I am Dutch).  So I signed up with a free account to create this first Blogcast.

A blogcast is a little bit less informal than a classic podcast. It wont feel like sitting with (distant) friends around the kitchen table and listening to them chitchat away about variety of related topics.  Think more of listening to a short Sunday column, read out to you as a conversation starter over the breakfast table. Over time the Tune into the Cloud Blogcast may very well turn into more free form chatter with guests and regular agenda items, and thus follow in the footsteps of some of the early pioneers of the cloud computing podcast genre such as the one and only original “The cloud computing podcast” and the still running “The CloudCast”.

But first we will turn to the current library of cloud topics and tunes, and render them as integrated audio experiences. With integrated basicaly meaning that each podcast will end with a song, either the full song for premium subscribers to the mentioned distribution platform or a 30 second clip for the rest of the audience. Today’s warm up clip “Thank you for the music”

[…]

Ok, I am sure that at this point your expect to hear ABBA blast over your speakers or earpods, and it literaly did blast. Balancing volume across different clips apparently is still an art rather than a science. But beside that smal snafou, it also did not last (might have to do with the fact I am not actualy based in one of the countries this function was released so far). And you can fool some website some of time, but … etc. So instead there is a good old link in show notes, right below this. Unexpected benefit of this, this podcast, or Blogcast now plays on most regular podcast players.

LINKS:

Notable Cloud Podcasts:

http://www.thecloudcast.net/

Honourable mention:   Cloud Computing Weekly Podcast (up to 2017) By David S. LinthicumGartner.com/en/podcasts/thinkcast 

Used Podcast Platform :

Anchor.FM (production)

Anchor.FM (distribution)

Audacity (recording)

Social Media Policy of my Employer 
https://www.gartner.com/en/about/policies/gartner-public-web-participation-policy

Tune into the Cloud – Pressure Off

Success, in bott the music and the cloud industry, is not merely about having the best product, delivered by the most capable performers.

Even the best product (be it a service or a song)  will only make it to the top of the charts if it has been put together with just enough magic to make it stand out from the crowd. In music this has been the realm of the producer. Although producers typically operate behind the scenes, many of us are familiar with icons like Quincy Jones, Phil Spector and Nile Rodgers, who – with “Pressure Off” – enabled Duran Duran to have an album in the top 100 for four consecutive decades. Some producers even have such a recognisable sound that they define a whole category of music. For those interest, here a longer list, but reader beware, not all producers ended well.

In the cloud the role most closely resembling that of a producer is the product manager (or PM for short). With limited direct reports and often no own budget their role is to make the whole sound better than the parts. Similar to their music producing peers many live their lives in relative anonymity, but some can be found in the wild, mostly on twitter, but also here and here (also see the Gartner PM framework and our upcoming growth event).

Personally I expect 2019 to be the year where the pressure is ON for more PMs to step into the limelight.

The video that accompanied Duran Duran’s “Pressure Off” went on to win the 2015 MTV EMA Video Visionary Award, no less then 12 years after the band received MTVs life time achievement award, demonstrating that the art of producing is not just important to newbies and start-up’s  

 

 

source https://blogs.gartner.com/gregor-petri/2018/12/31/tune-into-the-cloud-pressure-off/

Tune into the Cloud – Ho Ho Ho

And we are back (in this blog that is).  December is the time to look back and forth, and after posting the last original Tune in 2016 and a greatest hits eBook in 2017 there now seems to be again enough news and change to once again pick up the pace and follow the rhythm. However, not in the page long blog post that were “so 2016”, but rather in short samples, remixes and reality checks.

So what are these changes I plan to tune in to during 2019? First a number of long ignored (or accepted) concerns regarding lock in and concentration risks. As the cloud proliferates the idea of clouds becoming “too big too fail” (in the sense that they may bring down the entire system in their fall) is becoming more top of mind with different constituencies and decision makers. Other tunes will pipe into bundling and unbundling as a market(ing) force for enterprise scenario’s, and the role of the cloud as conduit for a next wave of disruptive developments (such as the impact of video on music clouds).

Meanwhile feel free to enjoy this festive season video playlist

source https://blogs.gartner.com/gregor-petri/2018/12/23/tune-into-the-cloud-ho-ho-ho/

Tune into the Cloud – eBook

In 2014 I started publishing a music themed series of “Tune into the Cloud” columns about cloud computing, first in Dutch at Cloudworks.nu and soon after in English on the Gartner Blog Network.

Tune into the Cloud – eBook now on iTunes

With the recent keynote of cloud pioneer AWS annual Reinvent event also being music themed it seemed a good idea to make this playlist of all columns available for easy reading, either directly from the links below or even more conveniently as below eBook for phones and e-readers.

The eBook

tuneintothecloudcover  EPUB format English 
 29 Columns
for iPhone/iPad
and ebook readers

 

EPUB Format Dutch
29+11=40 Columns

MOBI format English
29 Columns
for Kindle

 

MOBI format Dutch
29+11=40 Columns

 

The Tunes (in chronological order)

Slide33 And then there were three… Tune into: Software Defined Networking
Slide27 Alors on Dance Tune into: Creative Processes
Slide34 Blow Tune into: Putting Customers First
Slide36 Locked out of Heaven Tune into: Containers
Slide37 The Billionaire Boys Club Tune into: Go to market success
Slide30 Dock of the Bay Tune into: Containers
Haikudeck template and slides 4 - god is dj God is a DJ Tune into: Cloud Services Brokering
Slide12 Hello World Tune into: Coding
Haikudeck template and slides - atlantic crossing Atlantic Crossing Tune into: Building specific solutions, not generic technology
Haikudeck template and slides - cloud for sale Cloud.forSale Tune into: market consolidation
pricetag Price Tag Tune into: cloud margins.
Thinking out cl-oud Thinking out (c)loud Tune into: Cloud Migration?
Somethign got me started Something Got Me Started Tune into: the need for speed
losing my religion Losing My Religion Tune into: a cloud mindset
ghosttown Ghost Town Tune into: Hybrid
playbook CC2 Simple Plan Tune into: Cloud Tactics
harbor lights 1 Harbor Lights Tune into: International data transfers
imagine1 ppt Imagine Tune into: 2016
the circle The Circle Tune into: Social Privacy
Haikudeck template and slides 1 e Times They Are A-Changin’ Tune into: the future
space oddity Haikudeck template and slides 1 Space Oddity Tune into: Economic Fall Out
total madness Total Madness Tune into: Total Security
brexit Haikudeck template and slides 1 We’ll meet again Tune into: Brexit
chain gang 1 Chain Gang Tune into: Decentralisation
at the hop At the Hop Tune into: Hype Hoppinping
Money for Nothing Tune into: The Dark Side of Digitalping
Cheap Thrills Tune into: a Faceless Cloudping
Das Model Tune into: Direct Container Costingping
Closer Tune into: Ecosystem Platformsping

Subscribe also to the “official” Tune into the Cloud Playlist at Spotify
(some of the additional tunes stem from the Dutch precursor column):

 

And for the originals in Dutch visit Cloudworks.nl or download the ebook (in Dutch) here.

Tune into the Cloud: Closer

Tune into: Ecosystem Platforms

During 2016 cloud computing celebrated its tenth anniversary. Therefore, on the threshold of 2017, we’ll briefly look at what the next decade may bring. Also this brings to a close the version of Tune into the Cloud that published monthly in the Dutch print publication Cloudworks, the magazine where we started this series.

On your tent birthday, as fresh teenager, you’re normally not yet an adolescent – a.k.a, a beginning adult – and you may not be seated at the adult table yet. But there are exceptions. Sometimes things just move faster. Just look at a Max Verstappen, our Dutch Formula 1 phenomenon who – by literally going faster – now starts standard from the front of the grid. And also the cloud has maneuvered itself in pole position for the 2017 race, with more and more “fans” who go for a ‘cloud first’, an ‘all-in cloud or even a “cloud-only” strategy.

But the next decade will not just deal with the phenomenon of cloud computing. In addition to “shared, scalable, elastic, self-service and connected” IT systems there are namely four other areas that must be addressed effectively to provide a viable platform for economic and social activities of the next decade.

The first area is also the most significant, and that is the ecosystem area. In the past, companies bought solutions to optimize or automate their internal processes (eg. applications for billing, production and purchasing, sometimes even integrated into an ERP system). These applications they then used to better take part in the various supply chains they competed in. But if several companies in a chain each only optimize their own process and nobody optimizes across the chain then the officially name for that is sub optimization. And suboptimal is no longer sufficient to be competitive. Hence the increasing need for ecosystem orchestration platforms that transcends the individual players. The tricky part is that the company that takes the role of playing the orchestrator, immediately gathers vast knowledge (and thus power) over the rest of the chain. And with the growing importance of scale, there will be a very limited number of ecosystems. Meaning that for both consumers and producers there often will be little choice of ecosystems to participate in (often there may only be one per area). Just think of the public concerns about the power of early platform players such as taxi service Uber, hospitality player Airbnb and retailer Amazon.

The second area is closely related to the first and is all about interacting with customers and the associated customer experiences. As ecosystems grow stronger, it will be more difficult for individual companies (and governments) to interact with customers through their own websites, call centers or even sales teams. Many consumers and companies in China have grown accustomed to the wall garden of an app such as WeChat , that incorporates functionality similar to Facebook, WhatsApp, Uber, PayPal, Marketplace and dozens of others, under one integrated user interface. Accessing a new market while bypassing WeChat is risky at best. But that means WeChat increasingly determines how your products are offered, how you get paid and in many cases which (potential) customers get to see your offers. How to deal with the expanding power of such ecosystems enablers will be one of the trickiest issues of the coming decade. A discussion we already see some signs of in the current debate about the social impact of fake news and the possible responsibilities of players such as Facebook in this context.

The third aspect is the Internet of things or rather the needed connections to the numerous devices making up this next generation of the Internet. With billions of devices joining it will be increasingly more difficult – and dangerous – to throw on the Internet and then “just see who is coming along and what happens.” While that somewhat hap hazard approach was a big part of the original charm (and strength) of the original Internet phenomena. More and more we will use private or non-public network paths – albeit via software defined – to make contact with a pre-set collection of trusted parties. And guess who is going to decide who exactly is trusted and allowed to participate? Exactly! The same ecosystem enablers that provide the platforms that everybody uses. Providers who incidentally will increasingly carry out their duties and leverage their vast knowledge and data by exploiting the new capabilities of artificial intelligence and machine learning, which make up the fourth additional area critical for the next ten years cloud.

The next decade cloud which will therefore be much more closed than the first ten years. A maybe unexpected change to the cloud, that none the less seems to seamlessly fits with the rapidly changing – economic and social – sentiments about free trade.

With Closer we closed off the four-year series of Dutch Tune into the Cloud columns. The song Closer by The Chain Smokers was – with 12 weeks at number one on the Billboard Hot 100 – one of the most popular summer hits of 2016. It accelerated the duo behind the Chainsmokers to new heights of popularity, very much like we expect form the cloud.

The picture shows an ecosytem platform (in this case the Great Barrier Reef) under distress

Tune into the Cloud: Das Model

Tune into: Direct Container Costing

It is the day that you knew was coming, namely the day IT costs finally transitions from indirect overhead cost to direct attributable costs. This of course was to be expected with digital business becoming the norm(al). But the actual transition may still take a little longer than we might expect. The final transition needs what many would call a perfect storm, with all the ingredients lining up at the right time. A number of these ingredients is already present:

For one, we have seen – especially when the sold products themselves and the distribution thereof are becoming more digital – the share of IT cost in the total product cost increase, resulting in a greater need to account for these cost directly in the cost of each product. As a logical result of this we see the responsibility for these costs moving into the line of business departments. In addition we see the costs of the Internet of Things and smart machines shift to the line organization while we signaled years ago that in many industries the chief marketing officer may well have more to spend on IT than the CIO.

On a technical level we can – largely thanks to the introduction of containers – identify individual micro services costs and attribute them to the individual products or services that directly benefit from using these. Very much like we allocate the cost of wheels, saddles and gears in a bicycle factory to each produced cycle and not as a kind of convoluted overhead tax on the cost of the frames. What helps here is that we can start software containers per use and stop again. And that’s just the key difference between direct costs (such as mounting a wheel) and indirect costs (such as lighting or heating the factory).

This also opens the opportunity to move away from budget driven IT management. For digital business a budget driven approach is as inefficient as the budget-driven factories of the former Soviet Union. Where often already in August production had to be shut down for the rest of the year because the budget for saddles, tires or even bicycle bells was exhausted.

The scheduling of all those containers is by the way a challenge that is quit comparable to the challenges of planning production in a modern bicycle factory:  pretty complex. Especially if we want to do a certain amount of long-term planning and set ambitious but achievable cost targets. Calculating  how much it cost to produce an individual product after the fact is relatively simple, namely simply summing the individual cost of all the resources. But to set an upfront target cost (what should this product or service cost), we get stuck without a model that can be used to describe the service. In production we have known such models for years under the name of bill of material or formulation. In the cloud we often hear the term “services blueprint”, but in terms of maturity and acceptance of this, we are still some time away from beauty parades and model of the year elections.

For a sensible move to using direct costs, it is also necessary that we can pay our cloud providers based on the individual containers services used. With function platforms (fPaaS) such as Amazon’s Lambda we have seen this indeed become possible. Here we on pay per function called (in millionths of cents) and for the actual memory used (in tenths of seconds). But for many of the more generic container services payment is still a kind of flat fee calculated based on the cost of the underlying VMs, regardless of how many or what type of containers are actually running. That’s a bit like a bicycle factory which pays its supplier by the cost of the machine that produces wheels, instead of by the actual number of wheels consumed,.

The song “Das Model” from 1978 of the German band Kraftwerk is about a catwalk beauty parade. In the UK it originally came out as secondary B-side of as song called ‘Computer Love’, but the market was quick in deeming it the primary A-side, elevating it to the number 1 position in the UK top 75 singles.

Tune into the Cloud: Cheap Thrills

Tune into: a faceless cloud

For the longest time, product differentiation, has been the non-plus-ultra for technological oferings, but recently we see – in an sector that is about the same age as the cloud industry – a number of suppliers that are taking a diametrically opposite strategy. The industry we are talking about is the smartphone industry. A sector that – after early attempts such as the Nokia 9000 (the refrigerator) and the first RIM Blackberries (which you could not make any calls with) only really got started with the introduction of the first iPhone. That was in June 2007, just a year after what is now generally seen as the beginning of the cloud, namely the launch of Amazon’s S3 service in March 2006.

But while in the cloud both the leaders at the top of the market and the challengers at the bottom of the market are still trying to differentiate themselves by doing things different from their competitors (adding more features and replacing standard components with possibly premium but for sure proprietary implementations), we see at the bottom of the smartphone market a drive towards ultimate standardization. One by one a large number of suppliers of Android-based phones are installing plain vanilla Android. No special skins, not a collection of bloat ware and no proprietary software what so ever.

For users, this means there is barely any learning curve when changing brands. In addition, updates to the underlying open source software are immediately available – no need to re-apply any of the supplier-specific modifications. Meaning the phone will age much more slowly and thus can be used longer and more productively. Open Source as it was intended. Not only to provide vendors a quick start for the release of a yet again proprietary product, but to offer customers and  end users an interoperable and standard platform.

Selection in this segment of the phone market thus happens more and more based on pure hardware specs. The functionality is by virtue of using the exactly same software exactly the same and also the design is becoming less important for choosing. They namely all have a solid black glass plate with no buttons on the front augmented with a user selected case against drops and damage on the back. Although some innovations – such as wireless charging, fingerprint readers, and dual cameras – may come a year later with these vendors than with the market leaders, the do come typically implemented in a more standard way and at significantly lower cost.

The only question that remains is: Do I take the 8-core, 6″ for $ 95 or a 4-core 5.5″ for $ 50, both ex works and with the latest version of Android preinstalled. BTW the mentioned (indeed very low) prices are not wishful thinking of this blogging gadget freak, but found in the wild prices from reputable manufacturers, even including VAT (or salestax), import and shipping. In reality only the two or three market leaders do not seem to participate in this trend.

The question is whether struggling cloud providers (again everyone except for the two or three market leaders) should consider a similar approach. Not offering their own – albeit open source based – unique cloud solution that with a lot of luck and even more effort may capture just 1 or 2% market share, but instead a 100% undifferentiated on unmodified implementation of a standard platform. A standard platform which – if you add all these “commoditie” suppliers together – might well capture a 20/30% market share and where customers can switch seamlessly between vendors as not only the API but also higher level platform services (such as databases, messaging and container scheduling services) all work exactly the same. A step beyond what we now see with platform as a service frameworks, which, although the framework they started from was standardized (for example by being based on Cloud Foundry) is not really plug- let alone binary-compatible with the other vendors offerings.

If (increasingly struggling) challengers of the industry would indeed take this route then also selection of cloud providers could be largely based on objective criteria such as pure specs, prices, and of course … data center location. The latter is namely rapidly becoming more important in terms of compliance, data-residency and of course existing and upcoming privacy regulations.

Cheap Thrills is likely the most well-known song of Sia, the popular artist that performed at Apple’s most recent recent iPhone Launch (the 10th edition). An artist who has indeed chosen to link her popularity not directly to herself as a person, by making a habit of performing with a standard black and white faceless wig. Someething that has done wonders for her privacy.